Gold Prepares for First Weekly Drop in Three-for-a-Dollar Higher and Yields

A two hundred and fifty gram gold bar with the Argor-Heraeus SA brand in the center is found in this photograph arranged in Solar Capital Gold Zrt. in Budapest, Hungary.

Akos Stiller | Bloomberg | fake images

Gold prices rose slightly on Friday, but a stronger dollar and a rise in US Treasury yields still put the metal on the path of its first weekly drop in three.

Spot gold rose 0.2% to $ 1,729.86 an ounce, but the metal is down 0.9% so far this week. US gold futures rose 0.1% to $ 1,726.30.

“Funds are being bought and rallies are being sold (in the gold market) … clearly there are two definite sides of a coin and this is the main focal point,” said David Meger, director of metals trading at High Ridge Futures. . .

A firmer dollar and rising yields, pressuring gold are one side of the coin and the rise in coronavirus cases and the Federal Reserve’s low interest rate policy that raises it are another side, Meger added, noting that it is not. clear which side will ultimately prevail.

Gold’s modest gains came despite a firmer dollar and a rally in benchmark yields, which have weighed on the metal’s appeal recently.

A stronger dollar makes it more expensive to hold US dollar-denominated bullion for those who own other currencies, while higher returns raise the opportunity cost of the metal that does not perform.

“A stronger dollar and higher yields continue to spur further liquidation, primarily from the ETF community,” said Joseph Stefans, chief operating officer of MKS.

“Gold is stuck in a small range here and I can see it trading sideways for the next week.”

SPDR Gold Trust, the largest gold-backed exchange-traded fund, has posted outflows of more than 140 tonnes so far this year.

Elsewhere, silver fell 0.1% to $ 25.00 but remained above a two-month low of $ 24.39 per ounce struck Thursday.

Palladium was up 1.5% at $ 2,646.88 and platinum was up 1.2% at $ 1,160.64.


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